Industry Summary Articles

ANSYS, Inc. reported fourth quarter 2020 GAAP and non-GAAP revenue growth of 28% and 27% in reported currency, respectively, or 25% and 24% in constant currency, respectively, when compared to the fourth quarter of 2019. For FY 2020, GAAP and non-GAAP revenue growth was 11% in reported currency, or 10% in constant currency, when compared to FY 2019. For the fourth quarter of 2020, the Company reported diluted earnings per share of $2.46 and $2.96 on a GAAP and non-GAAP basis, respectively, compared to $1.91 and $2.24 on a GAAP and non-GAAP basis, respectively, for the fourth quarter of 2019. For FY 2020, the Company reported diluted earnings per share of $4.97 and $6.70 on a GAAP and non-GAAP basis, respectively, compared to $5.25 and $6.58 on a GAAP and non-GAAP basis, respectively, for FY 2019.

“Q4 was an outstanding quarter, concluding an excellent finish to fiscal year 2020. We delivered double-digit revenue growth, while maintaining industry-leading margins, despite the global disruptions caused by the COVID-19 pandemic,” said Ajei Gopal, Ansys president and CEO. “I am proud of our many accomplishments in 2020, in particular, maintaining our focus on customer success. That focus throughout the year resulted in our closing of the three largest license deals in our company history. We added to our market-leading portfolio with the acquisitions of two industry pioneers, Lumerical Inc. and Analytical Graphics, Inc. (AGI). And we recently released the latest version of our product portfolio, Ansys 2021 R1, making it faster and easier than ever for our customers to innovate.”

Gopal further stated, “The pandemic has reinforced Ansys’ core value proposition of cost savings and improved time to market. It has fast-tracked product roadmaps requiring more simulation, and it has accelerated corporate digital transformations as more engineers work from home for the long term. As we look ahead, these represent tailwinds to our total addressable market. I remain confident in our ability to drive strong and profitable growth.”

Maria Shields, Ansys CFO, stated, “We closed out 2020 with the strongest quarterly and annual financial results in the Company's history, with our fourth quarter results exceeding the high end of guidance across all key metrics. Highlights include record quarterly and annual revenue, with the operating leverage of our business model driving strong margins and earnings. ACV, which grew 20% and 9% in constant currency for the quarter and the year, reached record levels of recurring sources at 83% for the quarter and 82% for the year. Additional notable highlights include both record operating cash flow of $547 million and deferred revenue and backlog of $967 million. These results reflect the resiliency of our business model and the incredible efforts and dedication of the Ansys employees during unprecedented times. Given the prolonged state of the global pandemic, while we remain cautiously optimistic as we look into the first half of 2021, we remain confident in our ability to continue to execute on our strategy and continue to create long-term value for all of our key stakeholders.”

Financial Results

Ansys' fourth quarter and FY 2020 and 2019 financial results are presented below. The 2020 and 2019 non-GAAP results exclude the income statement effects of the acquisition accounting adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets, transaction expenses related to business combinations, and adjustments related to the transition tax associated with the Tax Cuts and Jobs Act.

GAAP and non-GAAP results are as follows:

The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2021 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures, for the three and twelve months ended December 31, 2020 and 2019, and for the 2021 financial outlook, can be found in the condensed financial information included in this release.

Other Performance Metrics

ACV is a metric the Company uses to better understand the business. There is no GAAP measure comparable to ACV. ACV is composed of the following:

• the annualized value of maintenance and lease contracts with start dates or anniversary dates during the period, plus
• the value of perpetual license contracts with start dates during the period, plus
• the annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plus
• the value of work performed during the period on fixed-deliverable services contracts.

Management's 2021 Financial Outlook

The Company's first quarter and fiscal year 2021 revenue and diluted earnings per share guidance is provided below. The Company is also providing its fiscal year 2021 guidance for ACV and operating cash flows. The revenue and diluted earnings per share guidance is provided on both a GAAP and non-GAAP basis. Non-GAAP financial measures exclude the income statement effects of acquisition adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets and acquisition-related transaction expenses.

The financial guidance below reflects the Company's current estimates of the adverse impacts of the global pandemic and trade restrictions. This guidance is based on the Company's evaluation of factual information it has determined to be relevant and the application of certain assumptions made by the Company. Please refer to the Company's prepared remarks document for essential additional information regarding the Company's financial guidance, including its assumptions regarding overall business dynamics and the economic impacts of COVID-19 and trade restrictions.

First Quarter 2021 Guidance

The Company currently expects the following for the quarter ending March 31, 2021:

Fiscal Year 2021 Guidance

The Company currently expects the following for the fiscal year ending December 31, 2021:

The difference between the GAAP and non-GAAP revenue guidance presented above is a result of the expected impact of the application of the fair value provisions applicable to the accounting for business combinations in the amount of $9.0 million for the first quarter and $19.5 million for FY 2021.

Note: As compared to the Company's expectations when it most recently provided financial guidance in November 2020, certain activities shifted operating cash flow from 2021 to the fourth quarter of 2020. These activities are more fully described in the prepared remarks document.

Conference Call Information

Ansys will hold a conference call at 8:30 a.m. Eastern Time on February 25, 2021 to discuss fourth quarter and fiscal year results. The Company will provide its prepared remarks on the Company’s investor relations homepage and as an exhibit in its Form 8-K in advance of the call to provide stockholders and analysts with additional time and detail for analyzing its results in preparation for the conference call. The prepared remarks will not be read on the call, and only brief remarks will be made prior to the Q&A session. The Company will also post a complementary investor presentation titled "Q4 2020 Investor Presentation" that can be accessed by clicking Events & Presentations, then Presentations at https://investors.ansys.com.

To participate in the live conference call, dial 855-239-2942 (US) or 412-542-4124 (Canada & Int’l). The call will be recorded and a replay will be available within two hours after the call. The replay will be available by dialing (877) 344-7529 (US), (855) 669-9658 (Canada) or (412) 317-0088 (Int’l) and entering the passcode 10151940. The archived webcast can be accessed, along with other financial information, on Ansys' website at https://investors.ansys.com/events-and-presentations/events-calendar.

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